Answer: Corporate donations to foreign countries are regarded as sales for tax purposes, and they cannot be exempted from VAT. If they are small-scale taxpayers, the tax-free income includes that the deemed sales income does not exceed 300,000 in a quarter, and the accounting treatment of VAT exemption or reduction is as follows:
Debit: Taxes payable-VAT
Loan: non-operating income
Accounting treatment of enterprise's external donation:
1, "Loss refers to the outflow of economic benefits that are formed by the non-daily activities of the enterprise and will lead to the reduction of the owner's equity, which has nothing to do with the capital invested by the owner." Correspondingly, the donated assets are also the outflow of economic benefits that are "not" generated by the enterprise on a daily or regular basis. This expenditure, regardless of public welfare relief donations and non-public welfare relief donations, is accounted for in the subject of "non-operating expenses".
2. The outflow of inventory goods and other assets of enterprises caused by foreign donations (although the tax law treats it as sales) does not meet the five conditions for the confirmation of sales income in the Accounting Standards for Business EnterprisesNo. 14-Revenue, and the enterprise will not increase its cash flow or profit due to donations. Therefore, the accounting does not treat sales, but transfers the money according to the cost.
3, involving the donation of fixed assets should first through the "fixed assets cleaning" accounting, the book value of donated fixed assets, cleaning costs, related taxes and fees, etc. are collected, and finally the balance is transferred to the "non-operating expenses" debit.
4. If the enterprise has accrued impairment reserve for donated assets, the accounting of donated assets must also carry forward the accrued impairment reserve.
If an enterprise donates in cash or bank deposits, it will be directly treated as non-operating expenses. What needs to be explained here is that whether the enterprise donates directly to non-profit organizations such as the Charity Federation and the Red Cross, or to government departments at or above the county level, or donates to other relevant units or individuals, its accounting treatment is the same. The difference is that for the part that meets the provisions of the Enterprise Income Tax Law on the deduction of donated assets, that is, the amount of donation is12 of the annual profit.
Value-added tax
The document "Answers to Questions about Implementation and Related Accounting Standards" (Cai Shui [2003] No.29) stipulates that when an enterprise donates economic matters to the outside world, the donated assets should be divided into two businesses: foreign sales and donation at fair value for income tax treatment, that is, the tax law stipulates that enterprises should pay turnover tax and income tax as sales.
Notice of the Ministry of Finance, the General Administration of Customs and State Taxation Administration of The People's Republic of China on Issues Concerning Tax Policies in Support of Wenchuan Earthquake Recovery and Reconstruction (Caishui [2008] 104No.): From May 2008 12, units and self-employed persons who donate their own products, commissioned processing or purchased goods to the disaster-stricken areas through public welfare social organizations, people's governments at or above the county level and their departments shall be exempted from VAT.
The accounting treatment of exemption of value-added tax for corporate donations abroad needs to meet the preferential tax conditions, and the value-added tax should be carried forward to non-operating income items. Corporate donations abroad are not exempted from value-added tax, which is a very important knowledge point in both accounting and tax law, and it is also a very important test site in the annual examination. I hope you can understand it. If you have other related questions about corporate donations or deemed sales, you can consult the gold medal lecturer at the window. Thank you for your attention.